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Case Interview Frameworks

Overview
Determine Key
Issue(s)

Develop
Hypotheses

Gather Data / Test


Hypotheses

Develop Options

Make
Recommendation

Refine Answer

As the interviewer describes the situation, think about what are the key issues
facing general managment

Develop hypotheses

Decide what data you need to better understand the issues

Listen to the facts

Evaluate which facts are critical to the key issues

Probe for more detail in critical areas

Use facts and numbers appropriate in building argument

Summarize options before making recommendation

State pros and cons - be fact driven

Make your recommendation

Kenan-Flagler Busine

Case Interview Frameworks


Using Frameworks
There is no golden rule, more than one framework may be applicable
Use an appropriate framework
Do not force a framework
Be hypotheses driven
Be prepared to revise your hypotheses
Mutually Exclusive and Collectively Exhaustive (MECE)
Listen for clues from the interviewer
Accept direction from the interviewer
Display your thinking visually / graphically
Be transparent in your analysis
Leave time to summarize and make recommendations

Kenan-Flagler Busine

Case Interview Frameworks


Some General Frameworks
The Three Cs
The Four Ps
Porters Five Forces (+govt.)
Supply & Demand
The Profit Equation
Internal - External
NPV Analysis

Dont be afraid to create your own framework, as long as it is logical,


appropriate and transparent to the interviewer.

Kenan-Flagler Busine

Case Interview Frameworks


Market Sizing
D e t e r m in e T h e K e y D r iv e r s
B o tto m U p o r T o p D o w n ?

M a k e A s s u m p t io n s

C a lc u la t e
U s e R o u n d N u m b e rs !
C om m on sense check!

A n a ly z e R e s u lt s
I m p lic a t io n s ?

I n c r e a s in g F a c to r s

D e c r e a s in g F a c t o r s

A d ju s t A n s w e r

A d ju s t A n s w e r

Kenan-Flagler Busine

Case Interview Frameworks


Declining Profits
W h a t 's D r i v i n g
t h e D e c lin e ?

G a th e r I n fo r m a t io n

A n a ly z e U s in g
P r o fit E q u a t io n

R even u es

P r ic e

D e c r e a s in g
C o m p . p re s s u re ?

E xp en ses

V o lu m e

D e c re a s e

In c re a s e

- M a r k e t C o n d it io n s
- C o m p e titio n

H ig h e r M a r g . C o s t s
- O r g . D y s fu n c t io n
- O v e r t im e

P r o d u c t M ix

F ix e d C o s t s

V a r ia b le C o s t s

U n usu al E xpen ses

S e llin g L e s s
P r o fit a b le I t e m s

- A d d e d C a p a c it y ?

- R a w M a t e r ia l P r ic e s

- W r it e o ffs
- L a w s u it s

Kenan-Flagler Busine

Case Interview Frameworks


Increase Profitability

R even u es

P r ic e

C O G S

U n it V o lu m e

D ir e c t M a t e r ia l

P r ic e S e n s it iv it y
- E la s t ic it y

E x is t in g M a r k e t
- P r o m o t io n
- P la c e

S c a le E c o n o m ie s
/ D is e c o n o m ie s
- S u p p ly C o n s t r a in t s

C o m p e t it iv e E n v ir o n .
- S u b s titu te s

N e w M a rk e ts
- G e o g r a p h ic
- E c o n o m ie s o f S c o p e

In v e n to ry M g m t.
- C a r r y in g C o s t s
- S h r in k a g e

SG &A

D ir e c t L a b o r

V a r ia b le O / H

R e p la c e w / m a c h in e s
- U n io n ?

C o s t A c c tg .
- A llo c a t io n D r iv e r s
- D o e s p r ic in g
r e fle c t C o s t

Can we explore economies of scope with entry into adjacent industry?

Kenan-Flagler Busine

Case Interview Frameworks


Increase Capacity?

S h o u ld W e I n c r e a s e C a p a c it y ?

M a rk e t D e m a n d

I n d u s t r y C a p a c it y

C o m p e t it o r s P la n s

In v e s tm e n t v s . Im p ro v e m e n t

M a rk e t T re n d s

T h re a ts

G lo b a l C o m p e t it io n
S u b s t it u t e s

I m p r o v e P r o d u c t iv it y

A d d C a p a c ity

C y c lic a l / S e a s o n a l

B o ttle n e c k s

A d d s h ift s

E conom y

D e s ig n fo r m a n u f.

A c q u ir e

C o n s u m e r ta s te s

O u ts o u rc e

Kenan-Flagler Busine

Case Interview Frameworks


Customer Turnover
W h a t H a s C h a n g e d in
th e F o llo w in g E n v ir o n m e n ts ?

Com pany

C u s to m e r

C o m p e titio n

R e g u la to r y

P ro d u c t
I s q u a lit y s a g g in g ?

T a s t e s c h a n g in g ?

A r e lo w c o s t c o m p e t it o r s
s t e a lin g fr o m u s ?

D o n e w ta x
in c e n t iv e s e x is t ?

P r ic e
H a v e s e n s it iv it ie s c h a n g e d ?
O v e r p r ic e d v e r s u s o u r c o m p e t it io n ?

D is p o s a b le in c o m e ?

A r e d iffe n t ia t e d c o m p e t it o r s
s t e a lin g fr o m u s ?

A n y n e w r e g u la t io n s
r e s t r ic t in g t h e u s e o f o u r
p r o d u c t a n d fa v o r in g s u b s t it u e s ?

P la c e
I s o u r d is t r ib u t io n g e t t in g s q u e e z e d o u t ?
A r e C u s t o m e r s C h a n g in g C h a n n e ls ?

D e m o g r a p h ic s o f o u r t a r g e t ?

A r e c o m p e t it o r s in t e g r a t in g
in t o d is t r ib u t io n a n d
s h u t t in g u s o u t ?

P r o m o t io n
A r e w e s p e n d in g ?
P u s h v s . p u ll?

D o n e w s u b s t it u t e s e x is t ?

A r e t h e y o ffe r in g o u r c u s t o m e r s
s p e c ia l in c e n t iv e s t o s w it c h ?
( p a r t ic u la r ly w it h s u b s t it u t e s )

H a s p u b lic im a g e c h a n g e d ?

Kenan-Flagler Busine

Case Interview Frameworks


Competitive Response

C u s to m e r
- W h a t d o th e y w a n t?
- H o w d o th e y c h o o s e ?

V a lu e s /T a s te s

P r i c e S e n s i t i v it y

C o m p e tito r
- W h e r e a r e w e p o s it io n e d ?
- W h e r e is t h e c o m p e t it io n ?

P u r c h a s in g H a b it s

P ro d u c t

C om pany
- H o w d o w e a d d v a lu e ?

R e s o u rc e s to re s p o n d ?

B u s in e s s r e l a t i o n s h i p s

P la c e
S u s b s it u t e s

D is p o s a b l e in c o m e

D is t r i b u t i o n c h a n n e l

D e m o g r a p h ic c h a n g e s

M a tu re m a rk e t?

B u n d le d p ro d u c t?

N e w c u s to m e rs ?

N o rm a l g o o d ?

P r ic e
P r o m o t io n

C o s t s tru c tu re

D is t r i b u t o r

T a n g ib l e

Vendor

I n t a n g ib l e

C u s to m e r

F in a n c e s

Given the above, is it worth making a competitive response?


How will the competition react?
Applying game theory or PARTS analysis may help.

Kenan-Flagler Busine

Case Interview Frameworks


New Product Introduction?

C u s to m e r
D o e s p ro d u c t m e t a n e e d ?

C o m p e titio n
Is th e r e a n y ?

Y es

P ro d u c t
H a ve w e d o n e h o m e w o rk ?
W h a t d o e s th e s e g m e n t w a n t?
P r o l i f e r a t io n o f p r o d u c t s a l r e a d y ?
P r ic e
H a v e w e e x p l o r e d s e n s it iv it y ?
C a n w e m a k e a p r o f i t a t t h i s p r ic e ?

M any

Is m a r k e t g r o w in g ?
P ro m o tio n
P u s h o r P u ll?
C o s t o f la u n c h ?
W il l c u r r e n t p r o m o t io n s h e l p ?

C om pany
C a n w e d o it ?

C a n w e e a t th e y o u n g ?

No

Few

W h a t w il b e t h e s t r a t e g y ?
L o w c o s t o r D if f e r e n t ia t e d ?

A r e t h e r e b a r r ie r s t o e n t r y ?

F in a n c e
A r e w e a b l e t o f in a n c e t h e l a u n c h ?
S h o u ld w e b u y a n e x is t in g p r o d u c e r ?

W il l w e b e f i r s t m o v e r s ?

Yes
C a n w e b e a t th e m ?

No
C a n w e e re c t s o m e ?

A n y p r e c io u s r e s o u r c e
th a t w e o w n ?
( R ic a r d ia n r e n t s )

O p e ra tio n s
D 0 w e h a v e c a p a c it y ?
S u p p ly n e tw o rk ?

M a rk e tin g
W il l w e c a n n ib a l iz e e x is t in g p r o d u c t s ?
I s t h is a c o m p l e m e n t / b u n d l e d g o o d
D o e s it b u il d o n r e s o u r c e s ?

P la c e
I s d i s t r ib u t i o n a l i g n e d w i t h c u s t o m e r ?
A r e w e e x p e r i e n c e d in t h i s c h a n n e l ?

Kenan-Flagler Busine

Case Interview Frameworks


International Expansion
In te rn a l

E x te rn a l

Q u a n t it a t iv e

D o e s it m a t c h o u r g r o w t h s t r a t e g y ?
- R O E /R O I

C u lt u r a l D iffe r e n c e s o f C u s t o m e r s
- T a s t e s / p r o d u c t p r e fe r e n c e s
- V a lu e s / g e n d e r r o le s

R O I / H u r d le R a t e

A llia n c e w it h lo c a l fir m ?
- J o in t v e n t u r e / d is t r ib u t o r

M e t h o d s o f C o n d u c t in g B u s in e s s
- I n t r o d u c t io n s
- G o v e rn m e n t c o n ta c ts

C a n o u r re s o u rc e s s u c c e e d o v e rs e a s ?
- F le x ib le e n o u g h t o a d a p t ?

E d u c a t io n a l D iffe r e n c e s

A m ount

I s o r g a n iz a t io n c o n s is t e n t
w it h o v e r s e a s 'a u t o n o m y '

E c o n o m y & E x c h a n g e R a te s

T im in g
- S t a r t u p / d is p o s it io n
- O p e r a t in g

C o r p o r a t e V a lu e s
- B r ib e r y
W o r k e r 's c o n d it io n s / c h ild la b o r

S e a s o n a lit y
- W e a th e r

D is c o u n t R a t e

C a s h F lo w s

D is t r ib u t io n s y s t e m
- T r a n s p o r t a t io n in fr a s t r u c t u r e
- D iffe r e n t c h a n n e ls
P o lit ic a l C lim a t e
- I n s t a b ilit y

L o c a l M a rk e t
- S iz e
- C o m p e t it io n

Kenan-Flagler Busine

Case Interview Frameworks


Investment Decision

I n v e s t m e n t D e c is io n

N P V A n a ly s is

U s e fu l L ife

C a s h F lo w s

T im in g
- O p p o r t u n it y C o s t

O th e r F a c to rs

D is c o u n t R a t e

- R is k F r e e R a t e
- I n fla t io n
- R is k A d ju s t

S t r a t e g ic F it

S y n e r g ie s

E n v ir o n m e n ta l

P o lit ic a l

C o m p e t it o r s

- M is s in g L in k s
o f V a lu e C h a in

- S e a s o n a lit y
- V o la t ilit y
- I n fla t io n
D e m a n d C y c le

S t a b ilit y
R e g u la t io n

- C u r r e n t S u p p ly
P o t e n t ia l D e m a n d

S iz e
- M a r k e t P o t e n tia l
- O u tflo w s
- W o r k in g C a p ita l

Kenan-Flagler Busine

Case Interview Frameworks


Company Acquisition
U n d e rs ta n d P u rp o s e
D iv e r s ific a t io n ?
G a in M a r k e t S h a r e ?
G e o g r a p h ic E x p a n s io n ?

A n a ly z e O p p o r t u n it y

In te rn a l F a c to rs

E x te rn a l F a c to rs

S t r a t e g ic O b je c t iv e

S tre n g th s & W e a k n e s s e s

R e s o u rc e s

A c q u is it io n F it

I n d u s t r y A t t r a c t iv e n e s s

P o r t e r 's F i v e F o r c e s
T h r e e C 's

I d e n t ify A c q u is it io n
C a n d id a t e s

S o ft I s s u e s
- C u lt u r e / F it
- M anagem ent
H a rd Is s u e s
- P r ic e
- B a la n c e S h e e t

Kenan-Flagler Busine

Case Interview Frameworks


Hostile Takeover Defense
T w o O p t io n s B o t h
D e s ig n e d t o R a is e t h e
V a lu e o f t h e C o m p a n y

S e lf- H e lp

W h it e K n ig h t

A r e W e H ig h ly L e v e r e d ?
( R e la t iv e t o t h e I n d u s t r y )

C la s s ic M & A
I s t h e r e a F ir m T h a t .. .

Yes

N o

H a s F in a n c ia l S t r e n g t h

D o W e H ave C ash?

Is s u e D e b t, B u y B a c k S to c k

S t r a t e g ic C o m p a t a b ilit y
C u lt u r a l F it

Yes
T h e n B u y B a c k S to c k
to R a is e S to c k P r ic e

N o
C a n W e R e le a s e G o o d N e w s
t o R a is e S t o c k P r ic e ?

Kenan-Flagler Busine